The maximum deferral limit has increased from $2,650 last year to $2,700 this year.
The IRS has modified the "Use It or Lose It" rule to allow participants to carry over up to $500 of unspent funds into the following plan year. The new rules also provide that a carryover does not reduce the following year's deferral limit, which allows you to plan ahead for larger, discretionary medical expenditures (such as a child's orthodontia) to have additional funds available.
Because of the tax advantages of a medical spending account, the IRS has established strict guidelines - the "Use It Or Lose It Rule" - for funds in excess of the $500 carryover amount that are not used by the end of the year. If you contribute funds to a Medical Spending Account and leave a balance over $500 in your account, you will lose any remaining balance in the account at the end of the Plan year. For this reason, you should plan carefully when you determine how much to place in the account.
Because of the new $500 carryover provision, most employees could receive tax benefits by putting money into a Medical SpendingAccount. Contact the Human Resources Employee Benefits Office for more information to see if participating in the Plan is right for you.
AFA will provide the option to use Debit Transaction Cards as the primary payment method for the FSA portion of the Plan. This means you can directly pay for medical care at the point of service with no out of pocket cost and no requirement to file claims and then wait for a reimbursement check (you must still save receipts for tax purposes or if AFA requests documentation of the claim). An additional option is to choose direct deposit for reimbursement of any manually submitted claims which will give you quicker access to your money without having to wait for a check to arrive in the mail. You can also still pay for services out of pocket, file for reimbursement at your convenience, and receive a check in the mail.
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